medium · FRM Part 1 Financial Markets and Products
An investor expects a stock to remain stable at around $100 and wants to use a strategy with limited risk. They buy a $90 call, sell two $100 calls, and buy a $110 call.
What is the name of this strategy and what is its maximum loss?
- Long Straddle; The net premium paid
- Iron Condor; The difference between strikes
- Long Butterfly Spread; The net premium paid
- Short Strangle; Unlimited loss
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